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Super Micro Computer Feels The Heat From Competitors, Customers, Supplies - This Analyst Turns Bearish

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Super Micro Computer Feels The Heat From Competitors, Customers, Supplies - This Analyst Turns Bearish

While Super Micro Computer Inc's (NASDAQ:SMCI) stock has gained 38% year-to-date, "making it the best performing stock in our Hardware coverage," there are downside risks on valuation, competition and gross margins, according to Goldman Sachs.

The Super Micro Computer Analyst: Analyst Michael Ng downgraded the rating for Super Micro Computer from Neutral to Sell, while reducing the price target from $40 to $32.

The Super Micro Computer Thesis: Recognizing the large market opportunity in AI servers, competitors have made significant R&D investments, which could pressure the company's market share leadership in the segment, Ng said in the downgrade note.

Check out other analyst stock ratings.

“Super Micro Computer's gross margins are likely to contract in 2025 through 2027 due to intensifying competition and the AI compute transition from Hopper to Blackwell,” the analyst stated.

“The company not only has high levels of customer concentration but also high supplier concentration, which "puts it into a price-taking position," he added.

Super Micro Computer's stock still trades at a premium to its server OEM peers, which is likely to converge due to the "lack of differentiation in AI server product" and risks associated with high customer and supplier concentration.

SMCI Price Action: At the time of publication on Monday, shares of Super Micro Computer had declined by 1.83% to $41.38.

Read More: Super Micro AI Servers Get Nvidia Boost, But SMCI Plunges 25% After Delayed Filing: Valuation Tumbles 80% In 3 Weeks

Photo: Shutterstock

Latest Ratings for SMCI

DateFirmActionFromTo
May 2021SusquehannaMaintainsPositive
May 2021Northland Capital MarketsMaintainsOutperform
Jun 2020Northland Capital MarketsInitiates Coverage OnOutperform

View More Analyst Ratings for SMCI

View the Latest Analyst Ratings

 

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